Bond Analysis Essay

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Bond Analysis
Phase 3 Discussion Board
David A. Barton
Colorado Technical University Online
Professor Angela Garrett
FINC 390 – 1204B – 07

Reuters Corporation Bond Spread (Bonds Online, 2012) Rating | 1year | 5year | 10years 15 years | 30 years | AAA | 14 | 40 | 68 N/A | 90 | BB | 195 | 225 | 265 N/A | 285 | CCC (JUNK) | 450 | 495 | 515 N/A | 545 | US Treasury Yield | 4.74 | 4.63 | 4.50 N/A | 4.56 |

Company | 1yr | 5yr | 10yr | 30yr | FEDERAL HOME LN MTG CORP (AAA) | 4.89% | 5.03& | 5.27* | 546% | Tine Co (BB) | 6.69% | 6.88% | 7.24% | 7.41% | Pepco (Junk) | 9.24% | 9.58% | 9.74* | 9.94% |

Analysis of Bonds
Bonds have been around for over 80 years and people and individuals have used them as a means to protect their money by investing in them. As a bond is a security and the means by which many people invest the amount they would like to save as you can buy bonds in whatever face value you would like to purchase. The max an individual can purchase when it comes to buying a bond is 10,000 dollars and as bonds are usually a fixed rate the amount of interest you receive on the bond you invest in will depend on the length of time it will take to maturity and the length the individual keeps the bond before cashing it in. Historically when interest rates increase the value of the bond will decrease and when the interest rates decrease the bonds value will increase so depending on what the interest was when the bond was purchased will depend on what it will be worth when it matures. List below is a 10,000 dollar EE bond that when purchased cost 5,000 dollars and as of Dec of 2012 the bond matured and todays valve when cashed in is valued at 28,032.00 when cashed in Dec 2012 but the interest stopped. When I did my research depending on what month you purchased the bond the value of the bond changed from a difference of 500 dollars to 1,000 dollars (Savings Bond Adviser, 2012) # | Series | Issue
Date | Face
Amount | Serial
Number | Cash
Value | Interest
Earned | Current
Interest
Rate | Final
Maturity
Date | Delete /
Remove | 1. | EE | 11/1982 | $10,000.00 | | $28,032.00 | $23,032.00 | 0% | Nov 2012 | [X] | | | | | | | | | | |

As an EE Bond is a U.S. Treasury Bond it is guaranteed by the government and in most cases will keep its value over the 30 year maturity rate.
As you can see from the research the company’s credit rating will affect the interest that a bond will make over the life of the bond. As you one can see that the interest rate will be less giving the investor a better yield on his investment. If one buys a junk bond and it may pay more interest but in the end the value of the bond would be less unless the interest was to decrease over time then the value of the bond would increase.
When a bank or lender looks at an individual’s credit rating when it comes to purchasing bonds or other major purchases like cars, house, or even a business ones credit rating plays a big role in which interest rate an individual can secure. The norm is if you have higher than a 700 credit score you can
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